What does the word mortgage mean to you? For most people it is a 30 year loan that they take out from a lender to buy a home. And that’s it. Most of us don’t think about our mortgage outside of making monthly payments, maybe refinancing, and for some using it to take out a line of credit. But there is SO MUCH more you should know about mortgages!
As a real estate professional, I think it is exceptionally important to understand the entire picture of a real estate transaction. I am not a lender and don’t claim to know all the intricacies of being a lender, but I do think it’s important to know what lending programs are available to my clients. Only by knowing those programs can I help my clients make the best choices.
There are many loan products that can significantly increase the affordability of buying a home. But they aren’t always talked about. Here are a few that I think people thinking of make a purchase should know more about.
Seller Financed Buydowns
A buy down is exactly what it sounds like, the seller pays to buy down the rate on your loan. There are a couple ways they can do this: there’s a 3/2/1 or a 2/1 buydown. This is a way for you to buy down the interest rate, with the idea that in the next three or two years the interest rates would decrease and you would refinance, thus enabling you to purchase a home at a better monthly payment, at this time.
ARMs
Adjustable Rate Mortgages or ARMs, where you can get a lower interest rate now. The rate may go up at the end of that term, but again that enables you to refinance at a time when rates have gone back down again.. ARM terms range from 5,7, or 10 years.
15 year mortgage
One of the best ways to save thousands,, if people can afford it, is the 15-year mortgage. Owning your home outright in 15 years. Imagine what that extra money, while it might be more up front, would do for you in 15 years for your wealth.
Lock and Shop
There are programs like lock and shop where we can lock in a rate for you today and have 90 days to shop. Currently interest rates are changing rapidly dropping up and down so means no matter what is happening during that time even if rates go up you can be locked in to a lower rate. And if they go down you can still get the lower interest rate!
These are just a few of the programs, there’s so much that I can go into for people who are looking to purchase at this moment. The other element that’s important to understand when it comes to mortgage hacks, is for my people who are currently homeowners. How can you build more wealth? This is my theme throughout the whole year, you’re going to keep hearing me mention it. Whether it’s early payoff hacks of five different ways that you can send additional money to your mortgage and reduce the years on your mortgage, getting rid of your PMI, getting rid of your escrow account, things like house hacking, refinancing to shorter mortgages. There are so many ways to make all of this more affordable.
If any of this is interesting to you, drop a comment down below. For more of these tips click here to learn more about our Mortgage Hacks Webinar on Saturday April 25th!
PNW Real Estate Blog 
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